Gold, silver, pgms, mining and geopolitical comment and news

Russia central bank gold purchases

The New York gold price closed Friday at $1,065.90 up $15.20 from $1,050.70 on Thursday’s close. In Asia, prices rose to $1,072.50 with London holding it at the same level and with the dollar index falling slightly to 98.70 down from 98.99. The euro rose to $1.0869 up from $1.0821 on Friday against the dollar. The London a.m. LBMA gold price was set at $1,071.15 up from Friday’s $1,055.25 up $15.90. The euro fixing was €985.96 up from Friday’s €975.55. Ahead of New York’s opening, the gold price was trading at $1,072.85 and in the euro at €987.21.

Silver Today –The silver price in New York closed at $14.10 up 38 cents. Ahead of New York’s opening the silver price stood at $14.25.

Price Drivers

On Friday a buyer bought 18.749 tonnes worth of shares into the SPDR gold ETF. This cost around $633 million. We haven’t seen such a sizeable purchase for over 4 years! This was responsible for the rise in the gold price on Friday and we expect more follow through in New York as this is factored in. If there is more buying into this fund or from other quarters of the market it will tell us that major investors views, in the U.S. are changing to the positive. The holdings of the SPDR gold ETF are now at 648.915 tonnes and at 155.87 tonnes in the Gold Trust. COMEX remains massively short.

The dollar index is still not attacking the 100 level, which we feel it needs to do to convince the market that the dollar’s bull-run is still hale and hearty. Against the euro it remains at the $1.086 level despite the interest rate differentials. So far this points to a gold price that is unlikely to fall until these numbers change. Again we say we believe that gold and silver investors must understand and appreciate the importance of currency influences on gold and silver prices if they are to succeed in these markets.

COMEX speculators cut their bullish positions last week emphasizing the viewpoint that they expect gold prices to fall heavily. If they are wrong we may see a heavy rout in these positions?

Meanwhile the Chinese continue their massive demand on a sustained basis with 46 tonnes of gold withdrawn from the Shanghai gold Exchange. And Russia continues to buy heavily for its reserves taking 21.8 tonnes off the market last month. We expect Russia to continue its buying program. We also expect them to diversify out of the dollar into the Yuan in 2016 too.

We expect 2016 to see a far greater presence made by China and the Yuan in both the gold and currency markets. As it is an event never seen before, it is difficult to quantify. But the sheer size of its population, growth and financial resources indicates just how easy it is going to become to change the currency world and monetary system. We see the U.S. reacting badly to this but gold and silver reacting well to it.